La Revue Squire

Rédigé par Antoine Adeline, Sian Lewis & Claudia Pickering le Mercredi 31 Mai 2006 à 16:16

French Law

In French Law, despite the fact that Articles 1134 and 1135 of the Civil Code specify that agreements must be executed in good faith, it is difficult to grasp precisely what is meant by, and the scope of the notion of good faith and contractual loyalty.

Good faith in the execution of the contract is classically defined as the expression of the duty of loyalty by each co-contractor so as not to offend the confidence that gave rise to the contract. The parties must act towards one another with loyalty, without fraud or malice.

Professor Le Tourneau reminds us that “this disposition, by its form, seems to be a general maxim of law, of ethical inspiration, long dormant but rich in potential.” Professor Cadiet specifies that “from the legal demand of good faith, jurisprudence has inferred a duty of loyalty in execution of contracts.”

Some authors consider that, besides the duty to cooperate placed upon the parties to facilitate the execution of the contract, a duty of transparency and of contractual honesty exists in those agreements where the “affectio contractus” is strong.

In theory, contractual loyalty can come in a multitude of agreements:

- Vigilance and the duty to be active;
- Fidelity to the spirit of the agreement;
- Respecting the interests of partners, proportionality and equilibrium.

Ideally, a contract motivated by the ideal of good faith ought to be just, that’s to say that there exists an equilibrium where each of the parties obtains a comparable advantage.

Contrats - Obligations - Responsabilite

Rédigé par Guillaume Taillandier le Mercredi 31 Mai 2006 à 16:13

Five years after the introduction into French law of a leniency scheme directed at encouraging companies that have taken part in anti-competitive practices to end and denounce those practices, the Competition Council has, for the first time, applied the scheme to a cartel (Decision 06-D-09 of 11th April 2006). On the very same day, the Council issued guidelines in which it clarified the procedure as well as the benefits that repenting companies can expect from the scheme.

The leniency scheme accords a total or partial exoneration from pecuniary sanctions incurred by companies or entities participating in vertical (for example, among manufacturers and distributors) or horizontal (among competitors) collusion to set prices, to establish production or sales quotas, or to organize a repartition of the market. This exoneration is available whether collusion has occurred at local, national or European level. Since 2002, the maximum sanction under French competition law has increased to 10% of the company’s highest worldwide gross turnover during the period in which the collusive practices took place.

The Council’s guidelines are intended to provide real guidance and to offer companies a guarantee of relative uniformity in relation to the application of the leniency procedures with European Commission practice, thereby providing a certain degree of judicial security.

The Council has confirmed that it will grant a total exoneration from pecuniary sanctions incurred by any company that demands leniency and satisfies the following conditions: (1) the company commits itself to cooperate fully with the DGCCRF's agents during investigations; (2) it has not put pressure on other companies to participate in the infractions; (3) it has not informed other companies of its leniency request; and (4) it commits itself to ceasing, without delay, its participation in illegal practices or at least suspending those practices until the leniency decision is rendered. In this regard, the Council seems to display more pragmatism than the European Commission by accepting a company’s continued participation in the collusive practices in order to maintain confidentiality and to preserve the effectiveness of the inquiry. It should be noted that companies that have actively participated in collusive practices through the use of pressure cannot benefit from the leniency scheme.

In addition, in order for the repenting company to obtain a total exoneration from sanctions, neither the Council nor the DGCCRF should already hold information about the practices in question, unless that information is insufficient to implicate the company.

If it is only possible to grant total immunity from sanction to the first company denouncing the collusion, the Council can always permit partial exonerations to any and all other companies that provide the Council with additional elements of proof that add significant value to the information already acquired. Even if only in principle, the reduction of the fine (calculated by virtue of the date and the company’s rank in the order of leniency requests presented) cannot exceed 50% of the amount of the sanction that would have been imposed upon this company if it had not benefited from leniency. However, the Council has retained the ability to grant more substantial immunity from fines.

The Council has received fewer than 20 leniency requests since 2002 and the majority of these requests have been received from subsidiaries of American companies. A certain number of questions remain among companies that are considering presenting a leniency request, in particular the increasing demands of consumer associations seeking damages collectively. The companies have a legitimate fear that victims (consumers or other competitors) may use their cooperation with competition authorities in relation to the leniency program to subsequently seek damages through the civil courts. The Council makes it clear in its statement that total or partial exoneration from pecuniary sanctions does not insulate a company from civil consequences arising from its participation in collusion. However, the Council wanted to send companies a strong signal by committing itself, as much as possible, to the confidentiality of the process (subject to the Council’s obligations, notably in regard to the European competition network) and by not turning cases over to the prosecutor’s office, which is authorised by the Commercial Code, if at the time of the inquiry, it appears that a physical person from the company (a director for example) has repented from having actively participated in putting the incriminating practices into action.

All that remains, is for the DGCCRF to convince companies, for whom providing this kind of information has not yet necessarily become standard practice, to make use of this leniency instrument.

The original version of this article (in French) is published in La Semaine Juridique, Editions enterprises et affaires, n° 19 (JCP E 2006, act. 221),11th May 2006.

Droit Commercial et Economique

Rédigé par Antoine Adeline le Mercredi 31 Mai 2006 à 16:05

1 - Who?

- Lawyers: there is no split profession and 'French avocats' undertake the advocacy;
- Judges: lay judges before commercial courts and employement tribunals; professional judges (civil servants) before civil courts and courts of appeal;

2 - How?

- French judges mainly rely on written submissions and evidence;
- There is no disclosure process (each party discloses the evidence it wishes to disclose) ;
- There is no sophisticated system of affidavits or witness statements;
- The trial itself is much shorter than in the UK (only one to two hours for a big commercial case);

3 - Where?

- The first instance courts are either commercial courts (Tribunal de Commerce) for commercial disputes or civil courts (Tribunal d'Instance or Tribunal de Grande Instance) for disputes involving a non-business persons;
- There is a special court for employment disputes (called the Conseil des Prud'hommes);
- Appeal is a right granted to every litigant (no leave to appeal required);
- The highest French court for private law is the Cour de Cassation. It's a second appeal degree.
(It only rules on legal issues and does not re-examine facts);

4 - How much and how long?

- The cost will vary depending on how big and complex the case is. In broad terms it is fair to say that litigating in France is less expensive than it is in the UK or the US;
- There is no system of costs (the loser can get away with token costs payable to the winner);
- There is no equivalent of the English Part 36 offer;
- It takes roughly 12 to 18 months to obtain a first instance judgment and another 18 to 24 months for an appeal judgment;
- Mediation is slowly developing in France as an alternative to litigation, although it is not as developed as in the UK. At Hammonds Hausmann we are trying to develop it.

One last piece of advice. Whenever you're contemplating or facing litigation in France, or involved in a dispute where one of the parties is French, do give the Paris CDR people a call for preliminary advice - it's quick and can save you a lot of time and money!

Contentieux - Procedure

Rédigé par guillaume taillandier le Mercredi 31 Mai 2006 à 15:34


Rédigé par Shannon Yavorsky le Mercredi 31 Mai 2006 à 15:03

Sports Law

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